Peace at a Price

The U.S. economy last week felt a strong new shot of inflation. The prospect of higher prices and steady profits--and the announcement of Air Force and Navy orders (see Aviation)--pushed the bull market to a new high. The parade was led by oil and aircraft stocks, notably Grumman, which felt prosperous enough to declare a 100% stock distribution (the stock rose five points in two days). The Dow-Jones industrial average got up to 192.96.

The most bullish influence was the growing certainty that production and profits would not be hamstrung by a rash of strikes. Following the lead of General Motors (TIME, June 7), industry was busily granting a third round of wage increases. General Electric, which had cut prices and tried to hold the line, gave up--and handed out a 9 to 15-c- an hour raise. Firestone Tire & Rubber settled for 11-c-, United Aircraft for 10 to 20-c-. The Aluminum Co. of America offered 9 to 13-c-. Chrysler had followed G.M.'s lead, and now Kaiser-Frazer came across with 14.4-c-; Briggs Manufacturing, Nash and Packard with 13-c-. All told, some 250,000 hourly workers got pay boosts last week.

The peace, as usual, was bought at a price. Nash raised its prices $74 to $90; Packard, $75 to $200. G.M. upped truck prices $10 to $110. Prices in other fields which had been steady for a time were creeping up too.

There was still no drop in demand. In the first quarter, reported SEC, the net sales of 1,070 U.S. corporations had risen 19% above the 1947 period. And there was plenty of buying power: in April, personal incomes had gone up $1.4 billion, reaching an annual rate of $209 billion. In some lines which had felt a sag in sales, strange and wonderful things were happening. A few weeks ago, for example, some home appliances were in the doldrums. But when the Iron Age set out to probe the slump last week, it was flabbergasted: demand had picked up so much that manufacturers were again talking up allocations to their dealers.

This file is automatically generated by a robot program, so reader's discretion is required.